So, one of the things most people in this industry know about me is that I like lease options.
Nope, scratch that… I LOVE them. 🙂
Pretty much always have, and here’s why…
Go back in time with me to the year 2000—I got a job after graduating with a degree in civil engineering from Iowa State.
I was transferred to San Francisco to work on a 2-year project, and instead of selling my house in Kansas City—because my wife and I would be coming back—I rented it out.
It was a NIGHTMARE.
I quickly learned the trials and tribulations of being a landlord. I still shiver at the thought…
So, even though the rent was about $150 more than my mortgage, I never saw a penny. It went to repairs and the property management company. And sometimes, we even had to shell out more to cover those things.
Blech, another shiever…
I clearly remember thinking: I’m NEVER going to be a landlord again.
Now fast forward to 2005/2006, and I started getting more excited about the real estate investing industry…
I read Secrets of a Millionaire Landlord by Robert Shemin, and he had an entire chapter on lease options.
I was immediately hooked by all the good stuff that comes with this investing strategy, like:
- You can rent properties out to tenants who want to buy them.
- They’re better, more responsible tenants and tend to take care of the house better since they have future ownership interest (they’re aiming to buy it.)
- You can get a larger deposit (the option consideration)
- And if they don’t buy the house, then they forfeit their option deposit.
- Usually you can have these tenants be responsible for repairs and maintenance
- And no Realtor commissions
Yep, this is why lease options grabbed my attention:
You get all the benefits of owning a rental, without all the headaches and hassles.
So, I became a student of lease options and read a ton, including Wendy Patton’s books.
When you’re buying houses with lease options, you can control property without owning it.
That is power, folks.
That is control.
“Control everything. Own nothing.”
-John D. Rockefeller
So, I started buying houses from the banks and selling them as lease options. 🙂 In retrospect, I can see a lot of mistakes I made doing that, because I was overpaying for many of them—counting on appreciation, which never happened—and half the tenants I put in them never ended up buying them. :-/
Then I started FLIPPING lease options.
So, I started creating lease option deals, then flipping them (the whole deal) to other investors for an assignment fee—people who wanted to step into my shoes and stay there till the tenant-buyer exercised their option to buy.
So I got to tap into the upsides of creating lease options, and profit nicely (wholesaling them) without saying in the middle of the deal.
Just like that, I had cracked the code on lease options, and merged it with wholesaling to create a brand, new thing—wholesaling lease options!
Within about 3 months of doing this, my part-time income surpassed my full-time engineering job income…
And that allowed me to quit my J.O.B. in 2009.
I’ve been doing lease options ever since.
When you set these up right, you can build cash flow and long-term capital wealth.
So, that’s my story on why I LOVE lease options, even still to this day. There’s still a fortune to be made in those footsteps, and I hope you’ll consider it for yourself.